Employees 'being taken to the cleaners'

Sham contracting is when cleaning firms label workers as self‑employed contractors even though, by legal or commercial definition, they are actually employees — a practice highlighted by Spotless Group chairman Peter Smedley.

According to the article, those misclassified miss out on pay and conditions they would get as employees, as well as entitlements such as work cover, payroll tax contributions and superannuation.

Peter Smedley says the clear objective of sham contracting is to buy labour at rates below fair market levels, effectively cutting labour costs by treating employees as independent contractors.

Mr Smedley warned there is a growing trend for cleaning firms to hire staff as self‑employed contractors — directly or through third parties — when those people are really employees, and he urged others to avoid being complicit.

The article explains an uneven playing field can arise when a buyer, including government, specifies award compliance in outsourcing conditions but does not take responsibility for ensuring successful cleaning contractors are actually compliant.

In this context, award compliance refers to the requirement that cleaning contractors meet the pay and employment conditions set out in relevant industrial awards — a standard some buyers require but may not actively enforce.

Everyday investors may want to monitor stories like this because industry practices flagged by leaders such as Peter Smedley can affect company reputations, competitive dynamics and the wider market practices in commercial cleaning.

The article relays Mr Smedley’s encouragement that both private and public sectors should check they are not unknowingly complicit and should take responsibility to ensure contracted cleaning firms are truly compliant with award conditions.